- Alphabet, the parent company of Google, is expected to report a 1.8% drop in ad revenue in the first quarter of 2023, according to analysts surveyed by FactSet.
- It would be the third drop in ad sales since Google went public in 2004.
- Google is looking to recapture growth in advertising by combining its artificial intelligence research groups and adding conversational AI features to its search engine to compete with Microsoft.
Alphabeth, the parent company of Google, is expected to report $53.7 billion in advertising revenue in the first quarter of 2023, a decline of 1.8 percent compared to the same period in 2022.
This was indicated this Tuesday, April 25, by analysts surveyed by FactSet.
If it occurs, it would the third decline in ad sales since Google became a public company in 2004, and the second straight quarterly decline after having scored a decline of 3.6 percent in the last quarter of 2022.
“The online advertising market is unstable as companies face an uncertain macroeconomic landscape. Less than seven days ago, the CEO of Meta, the company behind Instagram and Facebook, Mark Zuckerberg, told his workers that a slower rate of hiring is expected after the latest rounds of layoffs. Wall Street Journal.
Google is trying to re-trace advertising growth amid stiff competition from artificial intelligence.
To make it, Alphabeth combined its two main AI research groups into a single department called “Google DeepMind”, a decision that, according to the company itself, seeks to significantly accelerate the investigation in this matter.
As we explained in Merca2.0, the company led by Sundar Pichai is also studying adding conversational AI functions to its main search engine. It is a response to the movements of Microsoft (OpenAI, ChatGPT), today its biggest threat.
Google and its problems with advertising
Market analysts expect Alphabet’s total revenue to rise 1.3 percent from 2022 to $68.9 billion in the first quarter, on the back of growth from its cloud computing unit.
In parallel, they calculate that the American company reports an operating income of 16,400 million (always in the first quarter), which represents a drop of 18 percent year-on-year.
Discriminating by business unit, FactSet expects YouTube to bring Alphabet $6.6 billion in ad revenue in the first quarter, down 4 percent and the third straight quarterly drop.
For its part, sales in the cloud computing division of Google would increase in the quarter by 28 percent, up to 7,500 million dollars in the first quarter, a strong growth rate, but lower compared to the fourth quarter. of 2022.
Layoffs at Google
Google announced its biggest wave of layoffs in its history last January and, in March, launched a program to cut expenses that affect all its workers, from cafeterias and transfers, to the provision of computers and the use of internal company servers. .
Tempers are running high at Google because these cuts came as news broke that Pichai received $226 million in total compensation last year, including an extraordinary three-year stock payment valued at $210 million.
Since January, Alphabet’s shares have risen 20 percent.
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